6. Stock Options

3 Months Ended

Mar. 31, 2015

Notes

6. Stock Options

6.           Stock Options

The Company has established a Stock Option Incentive Plan (“SIP”) to authorize the granting of stock options up to 10 percent of the total number of issued and outstanding shares of common stock to employees, directors and consultants. Upon exercise of options, shares are issued from the available authorized shares of the Company.  Option awards are generally granted with an exercise price equal to the fair market value of the Company’s stock at the date of grant. 

On February 6, 2015, the Board approved a grant of one million options to purchase shares of common stock under the SIP to Directors, Executive Officers and other non-employees consultants. The granted options have been valued and recorded using the Black Scholes model. The Black Scholes calculation on the 1,000,000 options that were issued was a fair value of $0.06 per option ($60,000 in total). The option certificates reflected the actual date of the issuance of February 6, 2015.  The SIP was approved by shareholder vote during the January 20, 2015 annual shareholder meeting. The options were fully vested and recognized in the quarter ended March 31, 2015.

The fair value of each option award was estimated on the date of the grant using the assumptions noted in the following table:

Stock price	$           0.06
Exercise price	$           0.06
Expected volatility	224.20%
Expected dividends	-
Expected terms (in years)	5.0
Risk-free rate	1.48%
Expected forfeiture rate	-

The following is a summary of the Company’s options issued under the Stock Option Incentive Plan;

	Shares	Weighted Average Exercise Price
Outstanding at December 31, 2013 and 2014	2,990,000	$             0.21
Granted in 2015	1,000,000	0.06
Outstanding and exercisable at March 31, 2015	3,990,000	$             0.17

The average remaining contractual term of the options outstanding and exercisable at March 31, 2015 was 3.24 years.  As of March 31, 2015 options outstanding and exercisable had an aggregate intrinsic value of $10,000.